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Overview of People Analytics Technology Market

A recent study by RedThread Research indicates that the people analytics technology (PAT) market has reached a notable milestone, estimated at $12.2 billion by the end of 2025. This growth reflects a shift in the market dynamics, transitioning from exuberant expansion to a more moderate and mature phase. In contrast to the staggering growth of 50% noted in 2022, the current year-over-year growth rate now stands at 26%, marking a significant slowing down.

Growth Patterns and Market Trends

The annual report entitled “People Analytics Tech Market Trends 2026: Old Market, New Pressures” highlights the evolving landscape that the industry now faces. Among the key findings is the observation that many vendors are beginning to unbundle their services, leading to shifts in customer expectations and experiences. While 51% of the PAT market comes from financial services, there is a noticeable rise in healthcare and manufacturing sectors beginning to play larger roles.

According to Stacia Garr, Co-founder and Principal Analyst at RedThread, “The PAT market isn't shrinking—it's maturing, and that changes the rules for buyers.” This change emphasizes the need for companies to carefully evaluate what they are receiving for their investments, recognizing that past models of bundled services are becoming a thing of the past.

Unbundling and Changing Vendor Strategies

Two years ago, the majority of vendors bundled their consulting services and implementation support with their technology subscriptions. However, the latest study reveals that only about 25% of vendors now offer consulting services in their packages, with an even lower 33% including implementation services. This drastic reduction indicates an industry-wide transformation where buyers need to become significantly more aware and strategic about their purchases.

Additionally, nearly 90% of vendors altered their pricing models in 2026. Unlike previous practices that included more comprehensive packages, new figures indicate there are varying costs dependent on AI integration, data volume, or use of services—suggesting a need for greater transparency and clarity in vendor-client relationships.

Resurgence of Mergers and Acquisitions

For the first time in four years, the MA—mergers and acquisitions—activity has surged, skyrocketing 36% in this latest report. This essentially signals a return of confidence in the marketplace, although external investments have reached a historic low of 11%. The focus has shifted significantly towards acquiring smaller point solutions to broaden offerings, highlighting a tactic by well-capitalized companies to fill functionality gaps and enhance the value they deliver to their clients.

AI Adoption and Vendor Ethics

Almost all companies in the industry are now integrating AI into their offerings, but the majority are still in the preliminary stages of application. While 89% of vendors provide AI-based services, the bulk remains focused on developing assistive technologies rather than transformative workflows.

Furthermore, while there has been a marked improvement in the internal ethical guidelines among vendors—with about 94% now having codes of conduct—customer-facing education regarding data security and ethics has diminished. This representation of declining customer support highlights a growing concern over the responsibility vendors must uphold towards their clients, especially as the market becomes increasingly transactional.

With the changing landscape of the PAT market, buyers are encouraged to join RedThread Research's upcoming webinar on July 29 where experts will delve deeper into these trends and what they signify for future purchasing decisions.

To access the full report or to obtain detailed insights regarding vendor strategies and market dynamics, organizations can sign up for RedThread’s membership services.